Karnataka is a leading state in terms of industrial growth in India. It is the hub of the IT industry in the country. The technology cluster in Karnataka ranks as the fourth largest in the world. The state has 47 IT and ITeS SEZs, several regions dedicated to IT investment, and three software technology parks.
The state has sector-specific SEZs dedicated to other major industries besides the IT industry. Karnataka’s flora and fauna, along with a natural coastline of 320 km, provide its tourism industry a major boost. Here is a snapshot of the Karnataka industry and its growth.
Among the key industries of Karnataka are:
Major Industries in Karnataka
| Aeronautics | Automobiles |
| Bio Technology | Cement |
| Chemicals | E-commerce |
| Electrical - Electronics | Engineering Industry |
| Film Industry | Floriculture |
| Health Care | Internet Industry |
| Iron & Steel | Leather |
| Minerals | Pharmaceuticals |
| Plantation Industry | Construction |
| Power | IT/Software and ITEs |
| Solar Energy | Stock Market |
| Sugar | Textiles |
| Telecom | Wine |
| Renewable Energy | Agriculture |
| Tourism | Petrochemical |
GDP Contribution of Karnataka Industry
Karnataka occupies a position among the high economic growth states of India. In 2015-16, Karnataka contributed 7.54% to India’s GSDP. The state’s GSDP was 156.23 billion US dollars. Between 2004 and 2016, the state’s GSDP increased at a rate of 13.93% and reached 156.23 US dollars. The NSDP increased at a compound annual growth rate of 14.19% and reached 142.9 billion US dollars. The per capita GSDP grew at 12.91% and reached $2,557. The growth rates indicated are compound annual growth rates.
Karnataka industry: An Ideal Choice for Investment
Karnataka is a land rich in natural resources. Its policy incentives and infrastructure play a significant role in attracting investments for the various industrial sectors in the state. As per the data released by the Department of Industrial Policy and Promotion (DIPP), Karnataka has attracted FDI equity inflows amounting to 20.24 billion US dollars during the time frame of April 2000 to March 2016.
Karnataka is an ideal choice for investment due to several reasons. Some of the reasons are as follows:
- Superior manpower: Karnataka boasts of trained human resources in basic science, engineering, and management.
- Research and development facilities: The state has several Central Government research institutions and laboratories that provide high-quality research and development facilities
- Favourable climate: The climate of Karnataka is favourable for the growth of specific industries
- Good communication facilities: The communication facilities in the state are first-rate. The state is connected through airports, national highways, broad gauge railways, and sea ports.
Initiatives Adopted by the State Government to Strengthen Karnataka Industry
The state government is making huge investments to strengthen industrial segment and its infrastructure with the objective to further promote industrial development in the state. By creating industrial clusters, public-private partnership (PPP) projects and SEZs, the government is trying to give a boost to the industrial infrastructure scenario existing in the state. According to the Start-up Policy 2016, Karnataka aims to:
- Stimulate the growth of its technology start-ups
- Create around 6,000 start-ups that focus on products
- Mobilize funds worth about INR 2,000 crores.
A few of the important initiatives by the Government to promote the state as an industrial destination are:
- Under the Karnataka Industrial Policy, 2014-19, the state has come up with a number of fiscal and policy incentives for businesses.
- The state has planned to develop 12 biotechnology schools under the Millennium Biotech Policy.
- The state government has sanctioned an amount of 551.32 million US dollars in the 2016-17 budget for the betterment of the state’s rural roads.
- A SEZ of around 300 acres has been formed in Belgaum to create a precision engineering and manufacturing supply chain ecosystem. This will be beneficial for the manufacturing industries.
Organization to Provide Infrastructure Support to Karnataka Industries
The State Government has created several organizations and Institutions to provide infrastructural support to private sector enterprises.
- The Directorate of Industries and Commerce coordinates all activities required for industrial development. It allows the entrepreneur power, land and water besides the sanction of fiscal incentives.
- Karnataka Industrial Area Development Board (kiadb.com is not active anymore) acquires tracts of land for development into industrial sites.
- The Technical Consultancy Services Organisation of Karnataka offers expert consultancy services to small entrepreneurs at moderate rates.
- The Karnataka State Finance Corporation, Industrial Investment Development Corporation, Small Scale Industries Development Corporation and Karnataka Electronics Corporation provide them with finance, equity participation, factory sheds and raw material supplies.
Associations
Karnataka has 123 associations representing various trade, banking and industrial organisations. Prominent among the manufacturers association is the Karnataka State Small Scale Industries Association, Confederation of Electronic Industries of Karnataka and Peenya Industries Association.
All the 123 associations are affiliated with a parent: the Federation of Karnataka Chambers of Commerce and Industries (FKCCI).
Foreign Investments
Foreign investment approved in Karnataka during 1993-94 brought about 169 foreign investors from Germany, Japan, the USA, the UK, Switzerland and Sweden. They have invested in computer software, telecommunications equipment, electronics and electrical, machine tools and engineering products, medical and laboratory equipment, minerals, ceramics, chemicals, leather products, food processing and tourism.